Justice

State Officials Trying To Gut Obamacare Get Caught Making False Claims To The Supreme Court

CREDIT: AP Photo/Sue Ogrocki

Oklahoma Attorney General Scott Pruitt (R)

The Republican attorneys general of six states, Oklahoma, Alabama, Georgia, Nebraska, South Carolina and West Virginia, all signed a brief asking the Supreme Court to gut the Affordable Care Act. Yet one of the central claims in this brief — a claim that cuts to the heart of whether the Supreme Court should shred much of Obamacare or leave it intact — is at odds with a pile of evidence to the contrary. This evidence includes explicitly contradictory statements from the Republican governors of several states, including three of the states represented by these six attorneys general. And the six attorneys general were unable to muster any contrary evidence that supports their central claim.

This weakness in their case is unlikely to be unnoticed by the justices, however, as a brief filed Wednesday by a much larger group of state officials rounds up much of the considerable evidence undercutting the six Republican attorneys general’s claim.

To explain, the Affordable Care Act explicitly says that states should have “flexibility” to decide whether they want to operate health exchanges where their residents can buy health insurance, or whether the federal government should operate an exchange for them. Nevertheless, a lawsuit called King v. Burwell alleges that the residents of states who chose the second option lose access to tax credits intended to help them pay for insurance. If this lawsuit prevails, 13 million people, many of them children, could become uninsured.

To prevail, however, the plaintiffs in King must do more than simply show that they have discovered the best way to read Obamacare’s text. Under the Supreme Court’s decision in Pennhurst State School and Hospital v. Halderman, a state cannot be bound by an alleged condition tucked into a federal grant program “if a State is unaware of the conditions or is unable to ascertain what is expected of it.” Rather, when Congress says that it will only pay out money if a state takes a particular action, the Supreme Court insists “that Congress speak with a clear voice.” Thus, if there is uncertainty about how to read the law, that uncertainty must be resolved against the plaintiffs’ reading and in favor of the view that the law does not make tax credits conditional upon anything.

And that’s not all the bad news for the King plaintiffs. Under the Supreme Court’s opinion in Arlington Central School District v. Murphy, the question of whether a state is able to ascertain whether federal money comes with conditions must be evaluated “from the perspective of a state official who is engaged in the process of deciding whether the State should accept . . . the obligations that go with those funds.” Thus, if there is a wealth of evidence showing that state officials did not read Obamacare in the same way the King plaintiffs do — and it turns out that there is — that evidence also cuts strongly against a decision for the plaintiffs in King.

The brief filed by the six Republican attorneys general appears designed to address this weakness in the plaintiffs’ argument. It claims that state officials were “well aware” that the Affordable Care Act “conditioned the availability of tax credits on States establishing exchanges,” although it cites no actual evidence to support this claim.

On Wednesday, a much larger bloc of 22 states plus the District of Columbia filed their own brief opposing the King plaintiffs’ attempt to cut of tax credits. After reading that brief, it is not hard to guess why the smaller group of anti-Obamacare attorneys general were not able to muster any evidence for their position — there are piles of evidence demonstrating that the six attorneys general are simply wrong about how state officials understood the law.

Recall that the six attorneys general who filed in opposition to Obamacare include officials from Nebraska, South Carolina, Georgia, West Virginia and Oklahoma.

  • In Nebraska, Republican Gov. Dave Heineman explained his decision to allow the federal government to set up his state’s exchange by stating that “[o]n the key issues, there is no real operational difference between a federal exchange and a state exchange.”
  • In South Carolina Republican Gov. Nikki Haley wrote that “[b]y refusing to implement state-based exchanges, the state is ceding nothing,” a statement that is incompatible with the view that the state was actually ceding tax credits for its citizens.
  • In Georgia, an advisory committee established by Republican Gov. Nathan Deal determined that “Georgians will be eligible for [tax credits under Obamacare] whether the AHBE in Georgia is established by the state or federal government.” When Deal announced that his state would not set up its own exchange, deal made no mention of whether tax credits would be available, though he did complain about “Obamacare’s one-size fits all approach,” an approach which suggests that the law would operate similarly in every state.
  • In West Virginia, according to the brief by the pro-Obamacare states, “State officials answered ‘yes’ in June 2012 to the question ‘Will individuals who are enrolled in coverage through a Federally facilitated Exchange have access to premium tax credits.'”
  • Only in Oklahoma is there any evidence that state officials might have thought that tax credits were unavailable in federally-run exchanges. There, Attorney General Scott Pruitt (R) brought a similar challenge to Obamacare to the one advanced by the King plaintiffs, and Gov. Mary Fallin (R) cited her support for this lawsuit when she announced her decision not to operate a state-run exchange. Nevertheless, Fallin contradicted herself in a 2013 press release entitled “Governor Fallin Announces Extension of Insure Oklahoma.” That press release explains that “[t]hose individuals above 100 percent of the Federal Poverty Level qualify for the federal Health Insurance Marketplace and related advance premium tax credits, which will be offered to individuals and families earning up to 400 percent of the Federal Poverty Level.”

Nor is this the extent of the evidence showing that state officials were not “well aware” that they risked losing tax credits if they did not set up their own exchange. Virginia’s Republican Gov. Bob McDonnell said that he was unaware of any “clear benefits of a state run exchange to our citizens.” Wisconsin’s Republican Gov. Scott Walker said that “there’s no real substantive difference between a federal exchange, or a state exchange.” A brief filed by the governors or attorneys general of 24 states the last time the fate of Obamacare was before the Supreme Court explained that the law “can only operate in the manner that Congress intended” if the tax credits are “intact.”

On Tuesday, the Washington Post‘s Greg Sargent quoted multiple state officials who explained that the subject of whether a state risked tax credits by opting for a federally-run exchange never even came up. Kansas Insurance Commissioner Sandy Praeger, a Republican, told Sargent that “[t]he discussion was never about what happens to the subsidies.” Rather, “[h]ad it occurred to us that not doing a state exchange would somehow jeopardize citizens in Kansas being eligible for subsides, we would have made that argument loud and clear. And we never did. It never entered our minds.”

Similarly, Cindi Jones was appointed by Virginia’s McDonnell to lead the governor’s Virginia Health Reform Initiative panel. Jones told Sargent that “[t]here was no discussion at any meeting that one of the reasons we would want to do a state based exchange was that it would be the only way we would get subsidies.”

Now, however, the plaintiffs in King and the six attorneys general who support them want the justices to believe that states were “well aware” that many of their citizens would lose their ability to afford health insurance if the state elected for a federally-run exchange. This claim simply cannot be squared with the clearly stated views of multiple state officials, all of whom were “engaged in the process of deciding whether the State” should set up its own exchange, and many of whom are Republicans.